Hole in the Ground

Will the Kennecott Landslide Bury the Local Economy?

By Peri Kinder

August 9, 2013

On April 10, an enormous landslide dumped 165 million tons of dirt into the bottom of the Bingham Canyon Mine. That amount of dirt could fill 19,000 miles of railcars and stretch three-quarters of the way around the world.

The slide was even recorded at the University of Utah’s seismograph station, measuring at a magnitude of 2.4.

Perhaps even more shaken were the nearly 3,000 employees of Rio Tinto’s Kennecott Utah Copper operation, who suddenly faced the possibility of job loss. Shortly after the slide, mine officials announced ore production would be cut in half, and the mine wouldn’t be at full capacity for at least one year, if not longer.

The Bingham Canyon mine typically produces 97 percent of the copper mined in the state, nearly 300,000 tons each year. It also mines 4 million ounces of silver and 400,000 ounces of gold. A 50 percent cut in production could mean the loss of hundreds of millions of dollars in income, purchases with Utah businesses, and tax payments to state and local governments.

The Big One

No one doubts the slide at Kennecott will have a huge economic impact in the community, but no one really knows exactly what, or how extensive, that impact will be. But just a few short months after the slide, it appears Kennecott has been able to mitigate the damage to a surprising degree.

The slide itself was not unexpected. Utilizing sophisticated laser systems and working with highly trained technical experts, Kennecott carefully tracked the progress of ground acceleration on the upper northeastern portion of the mine. In early February 2013, engineers noticed movement in the earth, measuring only fractions of an inch. But just months later, those small increments of acceleration caused a massive landslide, the largest in the operation’s history.

Because they knew the slide was coming, Kennecott employees moved heavy equipment into safe locations and evacuated all employees from the area. With those precautions, 90 percent of the mine’s equipment was operable after the slide, and the mine was functioning within a few weeks of the event.

“Because we did have equipment, we are back in production now. We’re not producing at normal rates, but we are producing,” says Kennecott Utah Copper CFO Patrick Keenan. “We had equipment in place with the strategy to get up and running as soon as we could after the event. We have underground workings that are well under the material that was involved with the slide. And we established new locations to get back to those tunnels.”

Although reestablishing production and operations are a top priority, a more pressing issue is ensuring the safety of all employees re-entering the mine. Mike Nadon is the president of Cementation USA, an international company that has subcontracted with Kennecott for the last two years. Before the slide, 70 of Nadon’s employees worked doing underground development, driving tunnels deeper into the earth.

When the slide buried access to those tunnels, Nadon had to lay-off several of his workers. Now his team is part of the recovery effort, creating tunnels above the slide area that can intersect with the deeper tunnels that were buried. Nadon says both Cementation USA and Kennecott are big safety advocates, committed to zero harm within the operations. And even though the slide affected Nadon’s company, he is committed to bringing the mine back up to normal production.

“I wouldn’t say [the slide] is devastating to us. It’s much more devastating to Kennecott,” Nadon says. “I can’t imagine what [Kennecott’s] going through. We want to help them any way we can. They are going through a terrible time, dealing with more than 2,000 employees. We’re very sympathetic and hope they get the mine going strong again.”

Tough Decisions

Following the slide, the first thoughts on many minds were the job loss potential and the effect of the event on the local economy. A 2011 economic impact report, administered by the Bureau of Economic Business Research at the University of Utah, determined that more than 27,000 Utahns (about 8,800 households) were sustained because of the $1.2 billion of in-state spending by Kennecott and its parent company, Rio Tinto.

With a 50 percent cut in production, economic impact is inevitable. But Kennecott officials didn’t want to arbitrarily jump into hasty personnel decisions and offered employees several options including taking vacation time, unpaid leave or a one-time $20,000 payout for employees eligible for early retirement.

On May 23, Kennecott announced that approximately 100 salaried employees would be terminated permanently, and these workers were given severance packages along with employee assistance. The mine’s officers then waited until the early-retirement deadline to make any additional personnel changes.